Salazar: Shutdown will hurt Gulf production

WASHINGTON — The federal government shutdown could harm oil and gas production across the United States, former Interior Secretary Ken Salazar warned Thursday.

The Bureau of Land Management has already canceled an Oct. 16 auction of oil and gas leases in New Mexico’s piece of the Permian Basin, and an Oct. 22 auction of drilling rights in Montana is also in jeopardy. The agency also has stopped processing drilling permits for onshore oil and gas leases.

“Some of the bigger companies have permits stockpiled, but a lot of the smaller operators don’t, and they’re going to take a hit unless the government opens soon,” Salazar told reporters on a conference call arranged by the Center for American Progress.

Related story: Energy industry beginning to feel shutdown’s bite

While Interior Department agencies are still issuing permits to drill new wells in federal waters, the Bureau of Ocean Energy Management is no longer vetting proposed exploration plans that form the backdrop for individual offshore well drilling decisions.

“The continued shutdown of the federal government will ultimately affect the government approval of activities in the Gulf of Mexico,” Salazar predicted. Given “the contribution the Gulf is making to the energy future of the United States . . . it’s not the kind of rollback we ought to have.”

Salazar said he spoke from real-life experience, given the five-month moratorium on deep-water drilling imposed after the 2010 blowout of BP’s Macondo well in the Gulf.

“These delays, as we know from having to suspend deep-water operations for real safety reasons after the Deepwater Horizon oil spill, can have costs for companies, especially with offshore drilling units costing half a million dollars a day,” Salazar said. “The sooner Congress moves to fund the government, the better off it’s going to be for the energy future of the country.”

Salazar’s comments came on the 10th day of a federal government shutdown that has shuttered many agencies and halted an array of energy and environmental programs.

Industry analysts expect weekly oil and gas inventory data to soon stop flowing from the Energy Information Administration. The Nuclear Regulatory Commission furloughed most of its workforce on Thursday. The Federal Energy Regulatory Commission that oversees pipeline and power projects also is on the verge of closing its doors.

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